Corporate Governance
West Japan Railway Company
Last Updated: December 25, 2020
West Japan Railway Company Kazuaki Hasegawa
President and Representative Director
Contact: Governance and Stock Group,
General Affairs Department
Securities Code: 9021https://www.westjr.co.jpThe corporate governance of West Japan Railway Company (the "Company") is described below.
I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information
1. Basic views
Based on its "Corporate Philosophy" and "Safety Charter," the Company will make steady efforts to establish "corporate culture that places top priority on safety" to fulfill corporate social responsibility and to achieve sustainable growth for the future.
In order to realize these objectives, the Company will execute business operations from a medium- to long-term perspective in keeping with the intent of the "Corporate Governance Code" and the characteristics of its businesses centered on the railway business, and it will strive to establish long-term trusting relationship with each of stakeholders including shareholders. Furthermore from the perspective of improving transparency, soundness and efficiency of business operations, the Company, aiming for the enhancement of corporate governance, will make efforts to improve the systems to ensure the following: establishment of corporate ethics, strengthening of functions to monitor and supervise corporate management, and prompt execution of operations.
[Reasons for non-compliance with the principles of the Corporate Governance Code]
Principle 1.4
1. Policy for acquiring and holding listed stocks
To achieve sustainable growth of the business aiming at an increase in the corporate value of West Japan Railway Group (the "Group") over the medium- to long-term, the Company believes that it is important to strive for the maintenance and strengthening of relationships with clients or suppliers which may contribute to such growth. Therefore, the Company acquires and holds shares of the relevant client and supplier companies, comprehensively taking into account matters including a synergetic effect on the businesses of the Group.
With regard to holding such shares, the Company examines whether such holding may contribute to the increase of corporate value from the perspectives of medium- to long-term economic rationale and relationships between the client or supplier and the businesses of the Group, and it confirms with the Board of Directors concerning the objective and rationality of holding such shares.
2. Criteria for exercise of voting rights
The Company exercises voting rights based on judgments from such perspectives as contributions to the businesses of the Group through the investees' sustainable growth and such.
3. Disclosure of details of examination of whether or not the holding is appropriate and specific criteria for exercise of voting rights
The Company comprehensively judges whether or not the holding is appropriate, by individual issues based on the above policy. At its meeting of the Board of Directors held in June 2020, the Company confirmed the rationality of holding its shares held as of March 31, 2020, upon having examined individual holdings with respect to factors such as operating results, returns associated with the holdings, synergetic effects, and risk, from the perspectives of medium- to long-term economic rationale and relationships between the client or supplier and the businesses of the Group.
Moreover, for preparation and disclosure of the criteria for exercise of voting rights, the Company also considers that the above criteria are adequate.
The proportion of listed stocks held by the Company to assets is insignificant.
[Disclosure based on the principles of the Corporate Governance Code] [Updated]
Principle 1.7
To ensure that transactions with related parties do not harm the interests of the Company and the common interests of shareholders and to prevent any concerns with regard to such harm, the Company complies with the procedures prescribed in the Companies Act of Japan with regard to the competitive transactions and conflicting interest transactions (self-dealing and indirect transactions) between the Company and its Directors.
With regard to the transactions between the Company and its major shareholders, the Company has established the criteria for matters to be referred to the Board of Directors, and transactions falling under such category will require approval by the Board of Directors.
The Company will ensure a description of how the relevant approved transaction was conducted is reported to the Board of Directors, and that the content of this report is checked by the Board of Directors, thereby ensuring appropriate handling of the relevant transaction so that the interests of the Company and the common interests of shareholders may not be harmed.
Principle 2.6
The Company has not introduced a corporate pension fund plan, etc. or corresponding plan.
Principle 3.1
1.
The Company discloses and releases the Corporate Philosophy, Safety Charter and the Medium-Term Management Plan on its website, etc.
Corporate Philosophy, Safety Charter and Medium-Term Management Plan
URL:http://www.westjr.co.jp/global/en/about-us/
2. Basic policy for Corporate Governance is as per "I.1. Basic views" above.
3.
With regard to remuneration for Directors and Audit & Supervisory Board Members, the Company has abolished the bonus system for Directors and Audit & Supervisory Board Members and integrated it into monthly remuneration, and the level of remuneration takes into account the levels at other companies investigated by specialist external organizations to ensure an appropriate level of remuneration.
As the monthly remuneration for Directors who are not External Directors, the "basic remuneration" as fixed remuneration and the "performance-evaluation remuneration," which is determined by such factors as evaluation of business operating results of each fiscal year for the achievement of medium-term objectives, are provided. For the "basic remuneration," the Company prepares a table of remuneration organized according to management responsibilities, and applies it to respective officers on an individual basis.
To External Directors and Audit & Supervisory Board Members, the "performance-evaluation remuneration" is not given in view of their responsibilities and the "basic remuneration" is provided in return for their exercise of duties.
Whereas the "performance-evaluation remuneration" is largely premised on the notion of the Company achieving safe and consistent railway operations, its core business, the Company provides such remuneration at amounts that do not exceed 30% of the "basic remuneration," in line with the extent to which objectives have been achieved in terms of the respective targets set forth at the outset of the fiscal year. Accordingly, the Company sets targets with respect to ensuring railway safety, shareholder returns, consolidated profits, and asset efficiency, in consideration of the importance of systems underpinning appropriate risk-taking by management from the perspectives of achieving long-term sustainable growth and improving the corporate value as a corporate group.
With the aim of enhancing the objectivity, fairness and trustworthiness of Directors' remuneration, the Board of Directors consults with the Personnel and Remuneration Advisory Committee particularly regarding matters such as policies relating to the aforementioned remuneration and basic application thereof. This Committee comprises at least five Directors, the majority of whom being Independent External Directors. Based on said consultations, the Personnel and Remuneration Advisory Committee deliberates on Directors' remuneration from the perspective of objectivity and fairness and makes recommendations to the Board of Directors based on these deliberations.
Whereas remuneration for each Director and each Audit & Supervisory Board Member is set within the scope of the total amount of remuneration determined by resolution of the General Meeting of Shareholders, decisions regarding remuneration on an individual basis are left to the discretion of the President and Representative Director by resolution of the Board of Directors. Specific decisions are made upon engaging in deliberations whereby the Company holds meetings of the Personnel Committee comprising multiple Representative Directors, the Director in charge of personnel, and others, carried out from the perspective of better ensuring fairness and credibility of remuneration decisions, while respecting recommendations made by the Personnel and Remuneration Advisory Committee. Remuneration for each Audit & Supervisory Board Member is determined upon discussions among the Audit & Supervisory Board Members.
4.
As for the policy for nomination of Directors and Audit & Supervisory Board Members, the Company nominates those officers based on the selection criteria concerning high ethical standards, respect from others, dignity and managerial capability in accordance with the following procedures.
In the formulation of the policy for nomination and actual cases of nomination based on that policy, the Company ensures objectivity, fairness and trustworthiness of nomination by making the relevant matters subject to deliberation by the Personnel and Remuneration Advisory Committee prior to the resolution of the Board of Directors.
(1) The Company appoints and dismisses Representative Directors based on laws, regulations and the
Regulations of the Board of Directors, and the President and Representative Director proposes candidates for Representative Directors from among Directors, with such matters resolved by the Board of Directors.
(2)The President and Representative Director proposes candidates for Directors to be recommended to the General Meeting of Shareholders based on the selection criteria established by the Board of Directors, and the nomination of candidates is approved by resolution of the Board of Directors.
(3) The President and Representative Director proposes candidates for Audit & Supervisory Board
Members to be recommended to the General Meeting of Shareholders upon consent by the Audit & Supervisory Board, and the nomination of candidates is approved by resolution of the Board of Directors.
The Audit & Supervisory Board gives such consent in accordance with the criteria for consent to the selection of Audit & Supervisory Board Members established by the Audit & Supervisory Board.
5.
For explanation in line with the appointment and dismissal of Directors and Audit & Supervisory Board Members, such matters as brief history, position and status of important concurrent office as well as reasons for the appointment and dismissal of each candidate are described in the "Reference Document for the General Meeting of Shareholders."
Supplementary principle 4.1.1
The Company has established the criteria for the matters to be decided by the Board of Directors for the purpose of clarifying the scope of judgment and decision made by the Board of Directors for timely and appropriate decision-making by the Board of Directors, and propositions are referred to the Board of Directors in accordance with the criteria and the Board of Directors makes decisions through discussion.
From the perspective of appropriate risk-taking, the decision for referral of propositions to the Board of Directors may, where necessary, take into account not only on the quantitative criteria but also qualitative risk and importance, and the Board of Directors makes decisions through discussion.
Matters to be decided by the Board of Directors
Matters prescribed by laws and regulations and the Articles of Incorporation, and other important matters related to the management are referred to the Board of Directors.
Among these, main matters with fixed numerical criteria such as amount of money are specified below.
Large amount of loans
Disposal and acceptance of transfer of important property
Debt relief to investees, etc.
Main matters prescribed in the Articles of Incorporation as the matters to be decided by the Board of Directors are specified below.
Distribution of interim dividends Acquisition of treasury stock
Principle 4.9
The Board of Directors of the Company has established the criteria for independence to invite external officers who are able to carry out highly effective monitoring and supervision from an objective standpoint independent from the Company.
1. Person related to the Group
(1) The relevant person is not currently or was not in any of the past ten fiscal years an executive (meaning a person who executes business as an executive director, corporate officer, executive officer or other employee; hereinafter the same) of the Company or its subsidiary (hereinafter referred to as the "Group Company").
(2) A relative within the second degree of kinship of the relevant person is not currently or was not in any of the past ten fiscal years an executive of the Group Company.
2. Person related to major client or supplier
The relevant client's or supplier's transaction amount with the Company does not reach 2% of the consolidated operating revenues (consolidated total assets in the case of loan) of the Company or the relevant client or supplier currently or on average in the past three fiscal years (or if the relevant client or supplier is a corporation, etc., the relevant person is not currently or was not in the past three years an executive thereof).
3. Legal professional, etc.
Remuneration, etc. received by the expert from the Company, other than officers' remuneration, does not exceed the annual amount of ¥10 million currently or on average in the past three fiscal years (if the
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